CPI is negative and PPI has collapsed—yet the Fed is still mouthing off.

This “data puts you in your place” drama is a win for BTC
On July 14, CPI recorded its first month-over-month decline in six years.
On July 15, PPI came in at 5.5% year-over-year versus the expected 6.2%, directly slapping every analyst in the face. Month-over-month it fell 0.3%, the largest single-month drop since April 2020.
In two days, two sets of data—slap after slap.
So what did the Fed say next?
Waller: “Someone might say the job is done—I don’t see it that way.”
Waller was even harsher: if inflation shows no progress for a long time, rate hikes should be considered.
You don’t accept the CPI drop, and you still don’t accept the PPI collapse.
First, look at the data.
In June, CPI fell 0.4% month-over-month, versus expectations of only -0.1%—the actual decline was four times the forecast. Core CPI rose 2.6% year-over-year, versus an expected 2.8%. Energy prices plunged 5.7% month-over-month, immediately pinning inflation to the mat.
PPI was even more dramatic—down 0.3% month-over-month versus a flat reading expected. Core PPI rose 4.7% year-over-year versus 5.2% expected.
One detail: all four groups of prior values were revised downward. That suggests the past few months of data were overstated, and the cooling now is even stronger than you thought.
The market went wild. The probability of a rate hike in July dropped from 46% to 15%, then further to 10%. The 2-year Treasury yield plunged 14 basis points in a single day. Bitcoin surged past $65,500 intraday. Total crypto market capitalization surpassed $2.3 trillion.
The market is voting with its feet, while the Fed is still using its mouth to push for hikes.
So the question is—why is the Fed so stubborn?
Because the cooling in June CPI relied on a crash in oil prices. In June, the energy index fell 5.7% month-over-month, with gasoline plunging 9.7%.
And why did oil prices fall? Because the U.S. and Iran reportedly paused hostilities, and the Strait of Hormuz reopened.
But that ceasefire has already broken down. On July 8, the U.S. carried out airstrikes, Iran imposed a blockade, and Brent rebounded from $70 per barrel to $86.
June’s CPI reflects a world that no longer exists.
The Fed knows this. What are they afraid of? That if they loosen their stance and say “inflation is handled,” financial markets will celebrate instantly—U.S. stocks surge, BTC rockets, and financial conditions ease broadly—only for inflation to bounce back and slap them in the face.
So what are they doing? Managing expectations. Using rhetoric about hikes to buy time.
But here’s the truth that’s most favorable for BTC:
As long as the data truly shows cooling, capital will front-run the move. By the time the Fed is forced to turn dovish, BTC will already be nowhere near where it started.
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